ARR
The ARR (Annual Recurring Revenue) chart is an important metric for tracking the predictable revenue generated by your app's annual subscriptions. It provides a clear view of how much revenue your app can expect to generate each year from active subscriptions, helping you monitor long-term growth and forecast future revenue.
Any paid, unexpired subscription is considered active
Calculation
ARR is calculated by summing up the recurring revenue generated from all active annual subscriptions within a given year. It includes:
- New Subscriptions: Revenue from new users who subscribed for an annual plan during the year.
- Renewal Subscriptions: Revenue from users who renewed their annual subscriptions.
- Upsells or Add-ons: Revenue from any additional purchases or upgrades made by existing annual subscribers.
The ARR calculation does not include one-time purchases or trial subscriptions that are not converted to paid plans. Additionally, ARR is calculated before accounting for any store fees or taxes.
Example: How ARR is calculated
If your app had the following annual subscriptions:
- 50 new annual subscriptions at $100 each
- 25 renewals at $100 each
- 10 upsells at $50 each
The ARR would be calculated as:
ARR = (50 × $100) + (25 × $100) + (10 × $50) = $7,500
Usage
ARR is a key metric for subscription-based businesses that rely on long-term, stable revenue. It gives you a clear view of how much predictable revenue your app generates annually.
To leverage ARR in Botsi, segment your subscribers by their first purchase year and set the resolution to yearly. This helps you monitor how subscriber cohorts perform over time, revealing trends in retention, renewals, and growth, allowing you to adjust your business strategy, optimize products, and improve marketing efforts.